3 days Ago
Shares of Delhivery Ltd., the logistics services provider, are trading with gains of up to 8% on Tuesday, November 19. NSE Brokerage firm Elara Capital has reiterated its 'Buy' rating on the counter, with a price target of ₹ 570 per share.
Elara's price target on Delhivery at ₹570 implies a potential upside of 74% from Monday's closing levels. For the second quarter, Delhivery reported an in-line operational performance, aided by part truck load (PTL) segment growth on capturing higher market share on better capacity utilisation. EBITDA Margin was a slight miss on higher setup cost pre-festival demand.
Delhivery expects a gradual improvement in service EBITDA margin for its PTL business on better utilszation and synergy flow from the existing network, the brokerage said. The company's focus continues on ramping up volume and improving profitability. Overall growth momentum is expected to continue with new areas getting unlocked.
Elara remains hopeful of uptick in capacity utilisation. The management saw healthy festival demand in October with 78 million shipments as against 185 million in the second quarter of FY25. This is positive for growth revival in the third quarter, according to Elara.
The management now aims to enhance its service quality and growth in both PTL and express segments. PTL B2B (business-to-business) segment has grown significantly at 20% in the first half of FY25, compared to peers struggling for growth. It expects growth to continue with an improvement in profitability on better efficiency of automation in hubs and network centers.
It envisages current service EBITDA of 3% to improve to 15-16% in the long term on operating synergies. The express segment is also likely to grow on expectations of eCommmerce demand picking up, which is currently experiencing softness. Elara expects Delhivery to deliver 16% Compounded Annual Growth Rate (CAGR) in revenue and 128% EBITDA CAGR during FY24-27E.
Out of the 22 analysts that have coverage on Delhivery, 18 of them continue to maintain a 'Buy' recommendation on the stock, while four of them have a 'Hold' rating. Shares of Delhivery are currently trading 4.80% higher at ₹343.
Despite the gain, the stock has declined nearly 11% so far in 2024..
